Monday, August 31, 2009

Daily Wrapup For August 31st

Trading ended for August today, and the last day wasn't exactly a good day. News that the government of China is planning to cut back on bank lending sent the Shanghai market plummeting; so did the American market. On fear of interrupted global recovery, the three major averages all opened up with more than 0.5% losses. They fell further before 10 AM ET, to recover somewhat in early-mid morning. Most of the rest of the day was spent with the averages in trading ranges. A shortlived rally, beginning at about 2:30 PM ET, was largely erased but was replaced with a more durable rally starting an hour later. Thanks to a end-of-day added push, none of the three averages closed below 1.0% loss territory. The Dow closed with a 0.50% drop, the S&P declined 0.81%, and the NASDAQ ended the trading month with a 0.97% loss on the day. Oil also plummeted on the same news from China, as the connection between China's slowing economy and less demand for oil was quickly seen. Light sweet crude for October delivery plummeted $2.78 per barrel to end the day at $69.96.

The lowest-quintile cut-off also dropped today, from Friday's 11.95 to 11.80. Due to a readjustment, the S&P dividend yield cut-off remained unchanged at 2.59%. Once ETFs and stocks with market caps of less than 500M were gotten rid of, along with ones possessing greater than 10% yields, the Low P/E Bin was left with ninety-nine stocks for a drop of one from Friday. Here are the changes in the Bin, as dash-listed below:

- China Petroleum & Chemical Corp.
- Cooper Industries, Ltd.
- France Telecom SA
- Hubbell Incorporated

- FPL Group, Inc.
- Plains All American Pipeline, LP
- PriceSmart, Inc.
- SCANA Corporation
- Williams Pipeline Partners LP

All of the Arrivals got back in through drops in their stocks. The first Arrival is the only new one. China Petrolem and Chemical is an integrated major oil company; given the troubles both in the Shanghai and oil markets, it's not that surprising to see it show up in the Bin. The next Arrival, circuit protection device and tool maker Cooper Industries, had the worst stock decline of the four. A 4.10% drop, largely caused by the company being booted out of the S&P 500, brought its P/E below the Bin cut-off. France Telecom got back in for the same reason, even if its stock only dropped 1.15%. The final Arrival also returned for the same reason as the other three. Hubbell Inc., a maker of electrical components used in construction of homes/offices and components for electrical power transmission, hasn't been in the Bin for more than a month. A 3.24% drop in its stock brought it back.

A similar unanimity exists for today's Departures: all of them got out because the P/E cut-off fell below their own. Only one, liquid petroleum products storer and transporter Plains All-American Pipeline, saw its stock price rise today. The others declined, but didn't outpace the fall in the cut-off. Florida-based electric and natural gas utility FPL Group, international warehouse-club operator PriceSmart, North and South Carolina based utility SCANA, and natural gas transporter/storer Williams Pipeline all saw their stocks decline less than 1% today; those falls, as noted just above, weren't enough to keep them in the Bin.

Brookfield Properties Corp., a Canadian commercial real-estate company with holdings in several major North American cities, sent out a double annoucement today; both concerned a new preferred-stock offering. The first annoucement, made early in the afternoon, said that Brookfield would be selling C$150 million worth of preferreds yielding 6.75% for the first five years of their existence at C$25 per share. The second announcement, made after markets closed, upped the amount to C$250 million; the terms are the same. It's not every day that a share offering is bumped up 67% a few hours after the initial allotment has been announced. Brookfield common didn't do all that well today, suffering the same fate as other recent high-flyers. The stock dropped 3.35% to $10.97, even though dilution of this issue wasn't a factor. It was just a bad day for stocks that had rocketed up in the last couple of months; Brookfield common has been one of them.

That's all for today's Daily Wrapup. Thanks for reading, and may patience be your salve (if not salvation.)

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